Concorde Film Trust

Private Capital Starts to Flow

20% private capital, foreign spenders

At the press conference Balázs Zachar, department head of the Ministry of National Culutural Heritage (NKÖM) emphasized the links between the film law and the newly established film trust. The tax benefits introduced by the law serve a double purpose, he said. On the one hand, they intend to entice foreign productions to spend their budget in Hungary; on the other, they attempt to create additional resources for Hungarian films. "A few years ago it seemed impossible to involve private capital in Hungarian films, it happened only occasionally, in the form of sponsorship,” said Zachar, adding that the Hungarian tax benefit system may serve as a model for other countries in the region as well.

Interests coincide Orsolya Sarguta (Film Office), Balázs Zachar (NKÖM), Mihály Boris (Concorde) and Áron Sipos (Producers’ Association)

Identical interests, optimistic producers

Áron Sipos, chairman of the Association Hungarian Producers outlined how producers were affected by the entry of Concorde to the film market. Sipos said the event was an important step in a long working process.  He said that cooperation with the enterpise has been under way ever since the film law entered into force.  According to Sipos, the fact that everyone’s interests are similar provides ample reason for optimism.

Sipos said he knows of 26 projects that have already been registered at the Film Office and intend to make use of the benefit. The participation of Concorde means serious financial background for the film industry, he added.

"The best Hungarian partner " - Concorde

Concorde Securites Rt. is the leading independent investment bank in Hungary.  It was launched in December 1993 with a capital of Ft 50 million, and by now its own capital has exceeded Ft 2 billion. It is in regular business contact with six of the 10 leading international banks, the largest international institutional investors are using its services. The securities turnover of Concorde was around Ft 1,000 billion in 2003. The company also has a major asset management unit, and participated in numerous large capital market transactions in the past years.

Concorde Securities Rt is widely acknowledged both in Hungary and abroad. Euromoney magazine rated it as the best Hungarian securities trader every year between 1996 and 2000, and declared it the best Hungarian partner this year. The members of the Budapest Stock Exchange rated Concorde as the best brokerage company on the Budapest Stock Exchange five times.

Role of the mediator, creating economic and cultural value

Role of the mediator, creating economic and cultural value
Mihály Boris, director of Concorde Securities Rt presented the most important facts concerning the film trust. He said that the film financing trust of Concorde will play the role of a mediator between films shot in Hungary and large and profitable local enterprises. The basic element of the project is the tax benefit introduced by the film law.

The activities of Concorde’s film trust are the following:
- it rates and selects Hungarian production companies and their planned productions,
- provides preliminary financing pledge for the selected productions,
- starts fundraising from the large enterprises that intend to make use of the tax benefit,
- controls the production process of the films and accounting with the Film Office,
- obtains the necessary certificates from the Film Office for supporting companies,

The financing model and process of Concorde

Its financing model therefore provides assistance already when registering at the Film Office. Since these cases involve retroactive financing, payment takes place after providing a certificate. Boris added that Concorde is also working on a loan construction that could provide productions the amount of the support in advance.

For large enterprises the scheme offers the following advantages:

- tax savings,
- support only has to be paid after the certificates are delivered,
- Concorde selects productions based on its experience as a capital investor,
- one company may support 20-25 films, just like investment funds do,
- Concorde’s legal experts work out the most beneficial legal structure for each company,
- support may be anonymous – this also means that support is not tied to artistic or audience succes, only economic and legal considerations

Filmmakers may also benefit from receiving support through Concorde:

- the film trust supports feature films, TV films, series, animation films and documentaries,
- opens previously inaccessible for filmmakers,
- provides a legal structure for financing,
- the supporting company has no say in the production,
- the producer does not receive the support of a single company, support is allocated through the trust,
- assistance in accounting,  administration, and legal matters,
- reinforces the position of the producer on the international market

The participants of the press conference outlined that in case of every Ft 1,000 payable in corporate tax, a company will save Ft 16 more if its opts to support film production (since that sum is deductible from both the tax base and taxes payable) than if it does not.

Boris said that the scheme has been been available for the past year and several large enteprises have joined. The reason why they decided to make it public is because they intend to proceed cautiously. In 2004 they already have 16 productions on their list, with Ft 500 million support obtained (this means supporting filmmaking with a budget of Ft 2.5 billion). This year’s achievements also include the fact that the British comedy The Best Man was shot on location in Hungary.

Next year Concorde plans to support 25 productions, of these, 3-4 will be the local works of big-budget foreign productions. In 2005, the fund will be involved in supporting film production of a budget of Ft 10 billion, which means a support of Ft 2 billion on their part.

Zachar said that as far as he knows, other film financing schemes similar to Concorde’s are already in progress. According to Zachar, it is in the interest of all parties to have several such incentives in place, since  competition would benefit the Hungarian film industry in this field as well.

Concorde’s film fund will operate in a commission system, Boris said.  This is true for both sides - producers  and companies - but its rate will be different in case of each production.

The enterprise is currently involved with 16 films, but it is possible that in the future film financing will not only be possible in the field of production.